All Social Insurance Commentary

TCF fellow Harold Pollack takes a deeper look at the data that shows how race affects an employee's 401(k) savings account behavior. He says that although most employees contribute a similar amount to their accounts, minority workers were more likely to invest with caution, even if that means low rates of return.

In effect, these workers were using their 401(k) accounts as current savings reserves or as an emergency fund. As my writing collaborator Helaine Olen noted over email, these apparently foolish savings behaviors suddenly seem to make a lot more sense in the life-context of the people who are actually making these decisions.

There's more to a 401K savings account than meets the eye, particularly when looking at factors such as age and race. TCF fellow Harold Pollack explains the ways that intergenerational wealth disparities play a role in a worker's ability to save for retirement.

Differences in financial sophistication certainly play an important role. An improved system might help employees make better choices. Minority workers at this firm strongly favored safer asset classes such as money market funds that provide very low returns over the long-run. An opt-out system with simple, low-fee target date funds could be especially helpful.

Will Social Security go bankrupt by 2030 like policy makers on both sides of the aisle have claimed? TCF fellow Jeff Madrick says think again. Madrick discusses Social Security reform and suggested reading for those looking to learn more about proposed approaches to the issue. One of the books reviewed by Madrick includes Falling Short: The Coming Retirement Crisis and What to Do About It, which was co-authored by TCF trustee Alicia Munnell.

In light of the retirement squeeze, Falling Short by Charles Ellis, Alicia Munnell, and Andrew Eschtruth makes fixing Social Security an urgent priority. It doesn’t propose a single plan but offers a mix of moderate proposals from which to choose to assure Social Security’s solvency, including tax increases and raising the early retirement age at which a worker can receive benefits from sixty-two to sixty-four. It argues that raising the retirement age itself above sixty-seven to seventy would, however, result in too great a reduction in benefits. A retirement age of seventy would mean a 20 percent reduction in benefits for the typical earner. The authors also propose ways to increase employer and employee contributions to 401(k)s and improve investment returns.

Despite newly re-elected Speaker John Boehner's affirmation of compromise in his opening speech for the 2015 legislative session, it looks like the GOP is already up to its old hijinks after just a few weeks. First, the Republican House cohort has already caused an upset in Social Security policy, particularly with disability benefits, which is slated to run out of funding next year. Unfortunately, Republicans are unlikely to vote for any tax increase and Democrats are unlikely to agree to benefit cuts, leaving program funding that is scheduled to expire little hope for reinstatement. Michael Cohen mentions several other bills already passed by House Republicans including:

In addition, Republicans pushed through another effort to fund the Keystone pipeline, even though President Obama has made clear he intends to veto the legislation. Another rule change would force the Congressional Budget Office to do something called “dynamic scoring” on the economic impact of legislation. This change will make it easier for Republicans to propose tax cuts that appear revenue neutral, while actually blowing up the deficit.

TCF fellow, Harold Pollack has been quoted in an MSNBC article about Obamacare's impacts on crime.

By expanding coverage for substance abuse treatment, Obamacare could potentially help reduce crime and incarceration — provided that beneficiaries can actually access the help they need.

Researchers at Emory University found that expanding health care coverage increases the use of substance abuse treatment and reduces aggravated assault, robbery, and larceny, according to their new working paper for the National Bureau of Economic Research.

Social Insurance

Compared to other advanced nations, America’s retirement security and health care systems offer weaker protections against risks we all face. The Century Foundation’s work focuses on ideas for strengthening Social Security, pensions, and health care – including steps for building on the Affordable Care Act.